Articles Posted in Insurance Issues

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On Wednesday the US House of Representatives passed the misleadingly-named “Protecting Access to Care Act” on a largely party-line vote of 218-210 (all of the ‘yes’ votes came from Republicans; the noes included 191 Democrats and 19 Republicans). There is no indication yet whether the Senate will take up this little-noticed piece of legislation, but it is worth keeping an eye on, because the provisions of the bill could dramatically curtail patients’ rights. Earlier this month the Trump administration issued a statement of support for the bill – signaling that the President will sign the legislation if it ever reaches his desk.

Earlier this week the website HuffPost published a detailed analysis of the bill by a law professor from New York University. According to that article, the legislation would severely limit the “non-economic” damages that could be awarded in medical malpractice suits involving “injuries like permanent disability, mutilation, trauma, loss of a limb, blindness, sexual or reproductive harm, and other types of suffering and pain. HR 1215 would federally-mandate that if you suffer the most severe non-economic injuries, they are worth exactly $250,000 (no matter what the local jury finds).” In addition, the bill would impose an arbitrary time limit of three years on healthcare lawsuits, making it impossible for injured people to claim compensation for problems that emerged only slowly over a longer period of time.

The measure, in other words, would override state law to protect the economic interests of doctors, hospitals, the drug industry, medical device manufacturers and the insurers who cover all of them.

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In banking and insurance – businesses that people need but often hate – few companies have as stellar a reputation as the United Services Automobile Association, commonly known by its initials: USAA. The company is a membership organization, functioning in much the same way as a credit union. Many of the services it provides are offered at a lower cost than comparable commercial competitors, with membership open only to people who have served in the military and their extended families.

Because its core market consists of active duty military, veterans and their families the organization is often surrounded by a kind of patriotic halo. Yet USAA, like any other company, is ultimately in business to make money. Perhaps it is not surprising, then, that USAA has spent years fighting lawsuits that claim it frequently puts profits ahead of people in one of its core businesses: insurance.

According to the company’s Hometown newspaper, the San Antonio News-Express, “USAA continues to be dogged by lawsuits that allege it uses a ‘cost containment scheme’ to delay, deny or reduce medical payouts to customers injured in auto accidents.”

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It is an election year, so between now and November we can expect to hear many politicians at the national, state and local levels complain about trial lawyers and call for “tort reform.” As an article published this week in Slate outlines, however, an often disingenuous campaign designed to ‘protect’ big business frequently has an even more shocking effect – protecting child abusers and other people who injure children.

The article begins with the story of an Ohio pastor who was convicted of raping a 15-year-old girl in 2008. In addition to his criminal trial the man was sued by the girl and her family in civil court. As I have written in this space on many occasions, this right alone is important and worth defending. Access to courts for victims and their families is essential if justice is going to be served. As the article notes, quoting a legal scholar at New York University, often “the civil justice system is the only way for a perpetrator to be held directly accountable to the victim.”

A court awarded the victim $3.6 million in damages, but because of award caps required under Ohio’s tort reform laws she was only able to collect $350,000 – less than one-tenth of what the jury decided was her due. The girl and her family are now suing to have those caps declared unconstitutional on the grounds that they are “arbitrary and unreasonable, and thus a denial of due process.” Specifically, there is a strong argument to be made that damage caps violate the US Constitution’s guarantee of a trial by jury. An inherent part of that right is letting the jury decide what is fair – something that the tort reform movement seeks to stifle.

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As 2015 winds down we can look forward to many things in the New Year. Among them: a new law that will be an enormous boon to ordinary Oregonians. SB 411, which Governor Kate Brown signed last March, is slated to take effect on January 1. As that day approaches it is useful to pause and remind ourselves why this measure is so important. I wrote about this law last spring when the governor was considering whether or not to sign it and am pleased to offer this follow-up on the eve of its coming into force.

As summarized by the healthcare newsletter “The Lund Report”, SB 411 “takes two actions to bring Oregon auto insurance law in line with other states – it allows an injured person to receive the full benefit both of their own policy and the injury protection of the driver who caused the accident. It also requires the at-fault motorists’ insurance to pay the injured party’s claims first, before paying back money the other motorist’s insurance paid out for personal injury protection.”

That may sound like a fairly common-sense decision, but as Lund outlines, right now Oregon, unlike many other states, operates under a quite different system. “Current law requires the liable motorists’ injury coverage to be deducted from the non-liable party’s coverage for underinsurance, so that if each party is insured against injuries for $25,000, only $25,000 will be available for the injured person.” This bill, in other words, replaces a system designed to protect the bottom lines of insurance companies with one focused on helping injured Oregonians get the help they deserve.

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With the return of baseball there is also renewed interest this week in “subrogation” – a term that most non-lawyers aren’t familiar with, but one which could ruin the lives of many accident victims here in Oregon and elsewhere even as it enriches their insurance companies.

As outlined in a recent Bloomberg Business story, subrogation, a concept whose origins lie in the American Revolution, is a legal doctrine that allows insurance companies to claim damages from third parties in cases where they must pay claims. “An insurer, for instance, might seek to be repaid by the maker of a faulty furnace that caused a fire in a building the company covered,” the news agency writes. Few would argue with a straightforward example like that, but as is so often the case in modern America big business has turned a well-intentioned legal doctrine on its head in the service of its own bottom lines.

What has brought subrogation into sudden focus is the case of Bryan Stow, the San Francisco Giants fan who was beaten nearly to death in the parking lot of Dodger Stadium on Opening Day four years ago. Last year, Bloomberg reports, Stow won an $18 million judgment against the Dodgers and his two assailants (both of whom are now in prison) but “he has yet to receive any money” because his insurance company is aggressively using the legal system to try to claim millions from the settlement. This is happening even as his medical bills continue to mount, and as the 46-year-old faces a life of hospital visits, physical therapy and expensive ongoing medical care – not to mention decades of lost wages and the long-term emotional effect on him and his family.

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Governor Kate Brown is considering whether or not to sign a bill improving protections for car drivers. The choice she faces is one between protecting consumers involved in Oregon car accidents and protecting the insurance industry.

The legislation, formally known as Senate Bill 411, is designed “to ensure that Oregon auto insurance consumers can actually use liability coverage they pay for every month,” according to a news release by the Oregon House Democratic Caucus. It closes a loophole in current law under which properly-insured drivers who suffer injuries at the hands of an underinsured motorist often find that “the at-fault driver’s insurance (a minimum of $25,000) is subtracted from the victim’s Underinsured Motorist Coverage – for a half-million Oregonians this means they’ll never be able to access the full coverage they’re paying for.”

According to the Oregon House majority’s news release, “SB 411 will allow injured motorists to add their uninsured motorist coverage on top of the at-fault driver’s liability coverage so injured consumers get the coverage they paid for. The bill also ensures that Personal Injury Protection policyholders are able to recover their total damages first, before the insurance company.”

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We have all heard stories of medical price-gouging, but an investigation published earlier this week by the Tampa Bay Times shows that in Florida hospitals have taken the practice to a new level.

According to a lengthy investigation by the newspaper, a change in Florida law several years ago allowed hospitals to charge special fees for the use of trauma centers. The centers are specialized facilities within emergency rooms and hospitals have long argued that establishing and maintaining them incurs unique costs which the institutions ought to be able to pass along to patients and insurance companies. For such fees “a fair cost, according to the federal government’s Medicare program, is just under $1000.” According to the newspaper, however, because the fees are not regulated “the average fee today tops $10,000; the most expensive hospital regularly charges $33,000.”

To be clear: these fees are in no way related to actual services rendered. They are, as the newspaper puts it, a “cover charge.” The paper recounts numerous instances in which patients “were charged more in trauma fees than for their actual medical care.” Since the fees are both unregulated and unrelated to the actual medical services a patient receives, the hospitals have an obvious incentive both to raise the fees as much as they can and to admit patients to the trauma center regardless of whether or not they actually need to be there. In one particularly shocking case, “an uninsured woman… was charged $33,000 even though she only needed someone to treat superficial cuts.”

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We all know that lobbyists carry a lot of weight in Washington, Salem and other state capitals nationwide, but the lack of political will currently on display in Salem is especially hard to watch.

At issue is House Bill 3160. According to a recent article in The Oregonian, this modification to Oregon’s Unlawful Trade Practices Act would allow “Oregonians to sue companies for not paying claims promptly, denying coverage for losses or medical bills, and other reasons.” It would, in short, end the inexcusable exemption the insurance industry has long enjoyed from public accountability for its worst excesses.

The newspaper notes that “unlike similar laws in other states, House Bill 3160 would also allow third-party defendants to sue. For instance, an auto body shop would be able to sue a customer’s car insurance company even if it wasn’t the policyholder.” Put another way: by allowing third parties who have been wronged by insurers to sue the legislation would make it harder for large insurance companies to push ordinary Oregonians around. Protections like these are absolutely necessary after the many, many excesses of the insurance industry. The Oregonian notes that similar legislation was passed at the federal level in 2007, though that law specifically exempts health insurance companies.

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A bill currently pending before Oregon’s legislature seeks to give consumers new protections and close a significant legal loophole. As reported recently by the Salem Statesman-Journal, both houses of the Oregon legislature are considering legislation that would end the insurance industry’s exemption from Oregon’s Unlawful Trade Practices Act. This important legislation promises important new protections for Oregon consumers by holding insurance companies accountable for the damage they do when they delay, or refuse, payment on legitimate claims.

As detailed by The Lund Report, a health policy blog, the legislation (HB 3160 and SB 686) will “allow consumers to recover economic and non-economic damages in court when insurers commit unlawful insurance practices.” Put another way, it will allow ordinary Oregonians to level the playing field against companies that refuse to play by the rules.

As the Statesman-Journal reports under existing law, insurance companies are not covered by the Unlawful Trade Practices Act. That exemption, in practice, allows them to mistreat customers by denying them the coverage they have paid for. The Lund Report quotes one of the bills’ sponsors, Sen. Chip Shields (D) of Portland, noting that “insurance is the only business that is exempt from this law.” That exemption makes it much easier or insurance companies to put their own financial interests ahead of the health and welfare of ordinary Oregonians.

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A case that reached a resolution last week in Maryland offers a cautionary tale about dealing with insurance companies, as well as a lesson in the important role media sometimes play in helping victims obtain justice.

According to both Yahoo! News and CNN the story begins in June 2010 when a 24-year-old Maryland woman died in a car accident caused by another driver’s failure to stop at a red light. The driver who caused the crash was either uninsured or underinsured (media accounts vary on this point), but that ought not to have been a problem, since the victim carried uninsured motorist’s coverage as part of her auto insurance package with Progressive, one of the country’s best known car insurance companies.

Under Maryland law a trial was required to establish responsibility for the crash. To the fury of the victim’s family, Progressive’s attorneys helped the driver who caused the crash throughout the proceeding in an effort to establish that the victim was partly at fault – a circumstance that would have allowed the company to refuse to pay on its policy. The company has issued a statement pointing out that it did not formally represent the defendant, but the victim’s brother, quoted by Yahoo! News, said that the insurer’s lawyers repeatedly conferred with and assisted the defendant during the trial. They also made a closing statement claiming that his sister was at fault for the accident. “I am comfortable characterizing this as a legal defense,” he wrote last week, according to Yahoo! News.

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